Financial instruments working with personal loans

In the framework of the European Social Fund (ESF) thematic objectives, personal loans refer to finance for individuals that have been excluded from traditional financial services. These are often given for education or training, or to improve their employment prospects or towards reconciliation of work and private life. Personal loans co-financed by the ESF often have better terms than market loans including lower interest rates, longer and more flexible repayment periods, and lower or no collateral requirements. Loans are normally given for non‑revenue generating purposes in the short‑term, but have a social impact and contribute to the inclusion of disadvantaged and individuals who normally do not have access to the banking system. These personal loans should produce an educated and well‑trained workforce, with balanced work‑life conditions, contributing to competitiveness and productivity in the European Union by enhancing social inclusion and reducing poverty.

This brochure raises awareness and assists in a deeper understanding of the role of personal loans as an additional way for ESF programmes to foster the social and economic inclusion of disadvantaged individuals who are excluded from traditional financial services. The key aspect of a personal loan is that it generates significant social impact by contributing to improved work opportunities and living conditions for individuals.